Navigant Research Blog

Last fall I blogged about Transatomic Power, a startup founded by a couple of MIT grad students that aims to build innovative molten salt nuclear reactors that can consume spent fuel from existing conventional reactors. Transatomic got a big boost when it took the top prize at this year’s ARPA-E Innovation Summit.

ARPA-E is the advanced R&D arm of the U.S. Department of Energy, the counterpart to DARPA at the Pentagon. Transatomic, whose technology is based on work done at Oak Ridge National Laboratory in the 1960s, under Alvin Weinberg (a period covered in detail in my book, SuperFuel), won out from around 200 clean energy startups. Among the finalists were BDL Water, which aims to treat water used for fracking; Hevo, which is developing a wireless charging system for electric vehicles; and Altenera, which uses “oscillating reeds” to harvest wind energy.

Called a “Waste Annihilating Molten Salt Reactor,” Transatomic’s system sustains nuclear fission in a liquid, molten-salt fuel, rather than in solid fuel rods. Liquid-fuel reactors have several advantages over conventional solid-fuel rods, including safety – they operate at atmospheric pressure, obviating the need for huge pressurized containment vessels, and if the reactor begins to overheat, a “freeze plug” at the bottom of the core melts, draining the liquid fuel into a radiation-proof underground tank.

Thorium Shift

Molten-salt reactors are also the preferred technology for shifting to thorium, an alternative nuclear fuel that is cleaner, safer, and more abundant than uranium. Leslie Dewan and Mark Massie, the founders of Transatomic, say that their design is “fuel-agnostic” in the sense that it can run on either uranium or thorium. Using spent fuel from conventional light-water reactors, to help solve the nuclear waste-disposal problem, is a good way to get the initial reactors built. CEO Russ Wilcox told Mark Halper, of Smart Planet, that the uranium reactor would serve as “a stepping stone” to a thorium-fueled version.

It will probably cost $2 billion or so to get the first Transatomic reactor built. Winning a DOE contest is a long way from getting serious funding, but ARPA-E has an increased emphasis on commercialization, and the judges are largely drawn from big Silicon Valley venture capital firms. So the ARPA-E win is a big step for a small company that hopes to transform the nuclear power industry.

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Duke Energy’s decision to close the Crystal River nuclear reactor, following on the heels of announced closures for Dominion Energy Resources’ Kewaunee nuclear reactor in Wisconsin and Exelon’s Oyster Creek plant in New Jersey, raises some intriguing questions about efforts to combat climate change. The list of nuclear shutdowns is likely to grow.

This shift away from nuclear in the United States is seen by many as a boon to natural gas. Although natural gas has been touted as a “bridging fuel” to a renewable energy future, and as a flexible resource capable of filling in the gaps when the sun doesn’t shine and the wind doesn’t blow, scientists are discovering that a growing reliance upon natural gas could actually be accelerating global climate change.

How? While burning natural gas is cleaner than coal, leaks of methane – which is more than 20 times more threatening to our climate than carbon dioxide – are far more prevalent than previously realized. And while fracking has been viewed as a godsend, giving rise to a revived U.S. petroleum industry, there is a growing movement to tighten regulations of the controversial shale gas extraction method due to water quality concerns. If leakage rates into the atmosphere stick to about 3%, the net benefit of natural gas to the climate is a net positive. Anything higher and the reverse is true; recent samplings suggest in Utah suggested leakage of 9%. Even among utilities, there is growing concern about over reliance upon natural gas.

Japan Reverses Course

The challenges facing nuclear power mirror those of increasing renewable sources. They include high up-front capital costs and reliance upon government subsidies. Once externalities are factored in, I believe wind power will be the ultimate winner among carbon free power sources. Evidence supporting this prediction comes from markets such as Australia, where wind power is now cheaper than natural gas or coal, thanks to a recently imposed carbon tax.

Despite the gloom and doom facing the nuclear industry, a ray of hope has emerged for this purported solution to climate change in, of all places, Japan, site of the world’s greatest nuclear mishap. Almost 2 years after the triple meltdown at Fukushima Daiichi power plant, Japan‘s government is reversing course. Japan appeared to have ended its heavy commitment to nuclear power when the previous center-left government pledged last year to phase out all of the country’s 50 working reactors by 2040. The return to office of the conservative government under Shinzo Abe is giving the nuclear industry a second chance.

Despite international outcry and an investigation by the World Trade Organization, China still controls at least 95% of the world market for rare earth elements – a group of 17 chemically related elements that are used in a variety of high tech applications including electric vehicles, wind turbine blades, smartphone displays, and missile guidance systems. At the end of 2012, China actually said it would further restrict exports, in defiance of international trade groups and governments of heavy rare-earth using nations, like the United States and Japan.

Responding to the demand for diverse supplies of these strategic elements, the U.S. Department of Energy is establishing a Critical Materials Institute. Based in Ames, Iowa, the new institute, one of five Energy Innovation Hubs set up by DOE around the country, will use a DOE grant of $120 million over 5 years to “develop solutions to the domestic shortages of rare earth metals and other materials critical for U.S. energy security,” according to a statement.

One focus will be to “eliminate the need for materials that are subject to supply disruptions.” Translation: come up with new materials that serve the same purposes as rare earths, but are not controlled by China.

Japanese automakers have scored some early successes in that effort. According to a roundup by Asahi Shimbun, Honda plans to recycle rare earth components from nickel-metal hydride batteries used in hybrid cars, and Panasonic has instituted a similar recycling program for home electric appliances. TDK Corp. has developed a magnet with the rare earth element dysprosium painted onto the surface, rather than blended into the magnetic material itself, achieving the same effect. In possibly the most significant development, in early 2012, Reuters reported that Toyota “has developed a way to make hybrid and electric vehicles without the use of expensive rare earth metals, in which China has a near monopoly.” No specifics were given.

Around 60% of China’s rare earths supply goes to Japan, much of it to the major Japanese automakers.

Chinese Takeover

The growing likelihood of recycling and substitution programs has lessened the possibility of a global rare earths shortage – which the new DOE institute is being created to avoid – and has driven prices for lanthanum, cerium, terbium, and other rare earth elements off their record highs of 2011-2012. That in turn has undermined the strategy of Molycorp, the Denver-based mining company that, in 2011, re-opened the Mountain Pass mine on the Nevada-California border, once the world’s largest supplier of rare earths. Molycorp’s 2010 IPO was among the most successful public offerings of that year, but its stock has plummeted from its early 2012 highs to below $10 a share. Molycorp investors lost some $600 million in market capitalization in 2012, the company’s CEO Mark Smith departed under a cloud, and the company is now the subject of a federal investigation into its public disclosures. Bloomberg News reported in late 2012 that the company is now a likely takeover target – possibly by Chinese interests such as industrial giant Baotou Steel Rare Earth.

All of this turmoil makes the mission of the new Critical Materials Institute murkier, but it doesn’t lessen the need for a U.S. reaction to China’s mercantilist policies regarding its rare earth elements export industry. Proponents of advanced nuclear power also point to another reason to support U.S. efforts to secure a reliable supply of rare earths: many of the elements are found in monazite, an ore that also carries high concentrations of thorium – the radioactive element that could provide a safer, cleaner, and more abundant alternative to uranium for a new generation of nuclear reactors.

The most direct solution to the international rare earths imbroglio, of course, would be to find new supplies that are economical to recover and process. In June, Japanese geologists reported that they had found a huge, previously undiscovered rare earths deposit. The only problem with that is that the deposits are under the ocean, about 1200 miles off the coast of Tokyo.

As Hurricane Sandy reached the height of its fury on Monday night, October 29, the Oyster creek nuclear plant in southern New Jersey went on “alert” – the third-highest of four levels of emergency action for nuclear generating stations in the United States.

The oldest operating nuclear plant in the country, Oyster Creek is about 40 miles north of Atlantic City, just a mile from Barnegat Bay, an inlet off the Atlantic Ocean. It has been plagued for years by environmental protests and lawsuits, mostly relating to the hot water it discharges into the bay. It’s the same design as the ill-fated reactors at Fukushima-Daiichi in Japan that were inundated in the March 2011 earthquake and tsunami. Oyster Creek is scheduled to be shut down in 2019.

In anticipation of the storm, emergency crews from the Nuclear Regulatory Commission were dispatched to Oyster Creek, along with eight other nuclear plants on the Eastern Seaboard. Officials with the federal government and with Exelon, the nation’s largest producer of nuclear power and operator of Oyster Creek, were less concerned about damage to the reactor itself than about keeping the spent fuel rods, stored in a large pool onsite, from overheating. Intake structures and pumps take water from the creek and pump it through the plant to cool off both the reactor core and the spent fuel. While there is backup power for the reactor cooling system, there’s none for the spent-fuel pool.

“Exelon … was concerned that if the water rose over 7 feet it could submerge the service water pump motor that is used to cool the water in the spent fuel pool,” reported Reuters. In fact, the flood peaked at nearly 7-and-a-half feet, above the threshold, but the pump motors continued operating.

Vulnerable systems like this are in place at nuclear plants across the country, where fuel rods are often stored in large pools that must be supplied with a constant source of fresh water. Without that supply, the pool could boil in a day thanks to the residual heat of the radioactive fuel rods. That almost happened at Fukushima-Daiichi, and the spent-fuel pool at that plant remains at risk today. Nuclear industry spokespersons were full of assurances in the last few days that such a thing could never happen in this country. An Exelon spokesman said the company’s nuclear facilities have “multiple and redundant” cooling systems. U.S. nuclear power is “a whole different ballgame” than the Japanese industry, maintained Tom Kauffman of the Nuclear Energy Institute.

It could in fact happen here, and judging from the high levels of water at Oyster Creek it nearly did. A disaster of this magnitude highlights the central flaw of conventional nuclear reactors, which are largely based on technology nearly a half-century old (Oyster Creek went critical in December 1969). As I explain in SuperFuel: Thorium, the Green Energy Source for the Future, nuclear plants are controlled by elaborate engineering systems, with backup diesel generators and supposedly fail-proof systems, to keep the reactor and the spent fuel pools cool in emergencies. The nature of Sandy-caliber disasters, though, is that such systems often fail. Our nuclear fleet is one major flood away from a full-on disaster, and major floods are getting more common yearly. Meanwhile, inherently safe reactor technology, like the liquid-fuel thorium reactor, cannot melt down or overheat due to the design and the physics of the machine.

We’ve been hearing reassurances like the ones this week from the nuclear power industry for decades, but the machines themselves just keep getting older.